FMM wants tax waivers to rebuild businesses


Recovery journey: FMM says the economy and in particular the manufacturing sector must continue to be supported in their recovery journey through initiatives to be implemented under Budget 2021.

PETALING JAYA: Manufacturers, who have been hard-hit by the Covid-19 pandemic and the ensuing movement control orders, want immediate support to improve their cash flow, especially for small and medium enterprises (SMEs).

The Federation of Malaysian Manufacturers (FMM) has called on the government to extend the moratorium on loans and financing until year-end, or even to March 2021, and widen the criteria for the wage subsidy programme (WSP) to relieve business cash flow.

FMM president Tan Sri Soh Thian Lai (pic below) said measures to mitigate the impact of the third wave of Covid-19 infections under Budget 2021 would be crucial to ensure that business operations are not hampered by ongoing restrictions

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“Although Bank Negara has been aggressive and proactive in reaching out to SMEs to approach their bankers early to reschedule and/or restructure their loans, an extended moratorium is still the preferred and more effective assistance, especially since the the third wave of infections has again raised market uncertainties and risks, ” he said in a statement.

While the WSP has helped SMEs in the past few months, Soh said it was grossly inadequate for mid-tier and larger companies with more than 200 employees and turnover exceeding RM50mil. This group of larger companies contribute significantly to the gross domestic product (GDP) and if left unassisted, may run into further problems in the coming months.

FMM proposed that the government consider removing the 200 employees limit, or raising it to 800 workers, and the RM4,000 salary cap for the WSP.

Additionally, tax relief and assistance accorded to SMEs should also be accessible to mid-tier companies for at least the next two years to help in their recovery.

A key booster, Soh said, would be the waiver of both corporate and individual income taxes for the year of assessment 2020 and 2021.

“Since taxable income is greatly reduced, the loss in tax revenue to the government may be comparatively minimal. But for businesses, the waiver will allow them to recoup and strengthen their internal finances to rebuild their businesses, while employees as consumers will have higher disposable income for consumption and demand for goods and services.

“Both corporate and personal income taxes have to be waived for a stronger impact and multiplier effect from consumer to business to workers in the virtuous cycle of supply and demand, ” he said.

There also needs to be further support for companies to adopt digitalisation and Industry 4.0 through education, good quality broadband access to industries and tax incentives.

Apart from continuous support for automation and upgrading activities, FMM also advocated a viable way for SMEs to embark on innovative activities such as through financing of up to RM50,000 with SMEs matching it with investments of up to 20%.

FMM also hoped that the government would continue to ensure a conducive and friendly business and investment climate while strengthening trade and enabling the development of human capital.

“The economy and in particular the manufacturing sector must continue to be supported in their recovery journey through initiatives to be implemented under Budget 2021 as the industry continues to be impacted by the pandemic.

“Manufacturing must continue to be supported as the catalyst of growth, main contributor to exports and main source of demand for output from the other economic sectors, ” said Soh.

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